Worley breaks new ground in its journey to net zero

Worley Limited achieved a few firsts with the recent launch of its EUR500 million (approximately A$786 million) sustainability-linked bond (SLB). Besides being the company’s debut public bond offering, it was the first ever public SLB issued by an Australian company. Worley also became the first issuer in the world to launch its inaugural bond in the SLB format.

But more than these milestones, the well-oversubscribed deal is helping Worley deliver on its goal of reaching net zero in its scope 1 and scope 2 emissions by 2030. Scope 1 includes emissions from sources that Worley owns and controls, such as fuel combustion on site, while scope 2 refers to indirect emissions associated with purchased energy such as electricity.

As a global provider of project and asset services in the energy, chemicals and resources sectors, the company understands how critical it is for businesses to respond to the challenge of climate change.

“Worley has a clear target of reducing its scope 1 and scope 2 emissions,” says Mr Craig Busch, Global Treasurer and Head of Property. “We’ve also joined the Business Ambition for 1.5°C campaign, which aims to limit climate change to 1.5 degrees, and have aligned our emissions reduction target with the goals of the Paris Agreement.”

Worley believes that the key to real change is to prioritise projects that foster a circular economy and achieve net zero emissions. And that’s where Worley has taken a leadership role.

The company decided to issue its first SLB to help fund its projects and align its financing with its sustainability goals, working with HSBC as its sole environmental, social and governance (ESG) structuring adviser.

“Worley has been working on decarbonisation and sustainability projects for a long time, and it’s important for our financing strategy that we align our long-term funding with the group’s sustainability ambitions,” says Mr Busch.

Worley’s five-year senior unsecured bond comes with a sustainability performance target of reducing its absolute scopes 1 and 2 emissions by at least 57,177t carbon dioxide equivalent by FY2025, compared to its 2020 baseline. If it misses this target, Worley will pay investors a 25–basis point penalty at maturity or on early redemption.

The deal generated an impressive order book of more than EUR1.7 billion and one of the biggest price compressions in 2021, with final pricing of 125 basis points over mid-swap. It was the largest five-year euro bond transaction from a BBB rated Australian corporate.

“The ambitious target and the potential of paying substantial penalties highlight just how committed Worley is to cutting its carbon footprint,” says Mr Christian Bailey, Head of Corporate Coverage HSBC Australia. “Given Worley’s leadership in sustainability and now its first foray into the SLB market, we expect other Australian corporates to follow its lead.”

Worley and HSBC have been working together for nearly 30 years in around 40 countries across credit and lending, cash management, trade finance and debt capital markets. When Worley decided to align its financing with its sustainability targets, HSBC was one of the first banks it sought advice from.

“HSBC understands the global structure of Worley and is a key financier,” says Mr Busch. “The HSBC team understood what we were trying to achieve with our debut issue and assisted in providing sound advice and the best execution for the SLB process.”

According to Mr Bailey, knowing Worley’s business and financing needs inside and outside Australia helped HSBC provide strategies to successfully price and seamlessly execute the deal.

“We have the track record and a global network of ESG financing experts to help clients like Worley transition to net zero,” adds Mr Bailey. “More importantly, we had our team on the ground working with Worley’s treasury and senior management teams. And that mattered a lot.”

Looking ahead, Worley sees an opportunity to convert its corporate loans into sustainability-linked loans.

“This would involve utilising our SLB second party opinion and applying this to our broader financing platform,” says Mr Busch. “Together with our growth and sustainability ambitions, Worley will partner with HSBC to leverage their global reach and experience in sustainable finance markets.”